Professional Skepticism Traits and Fraud Brainstorming Quality

37 Pages Posted: 29 Dec 2020

See all articles by Sanne Janssen

Sanne Janssen

Open University; University of Antwerp

Kris Hardies

University of Antwerp

Ann Vanstraelen

Maastricht University

Karla M. Zehms

University of Wisconsin - Madison - Department of Accounting and Information Systems

Date Written: September 25, 2020

Abstract

Auditing standards emphasize that fraud detection is an important objective of an audit and require the exercise of professional skepticism (PS) and a discussion among the engagement team to prevent and detect fraud. The purpose of this study is to examine whether professional skepticism is a driver of fraud brainstorming quality. We investigate the relationship between fraud brainstorming quality, using the measure of Brazel et al. (2010), and auditor’s professional skepticism traits. Using proprietary data from Dutch audit firms on 125 engagements, we find that neutral trait skepticism and professional moral courage of the partner have a significant effect on fraud brainstorming quality. We observe a higher attendance rate and contribution of specialists, more extensive discussion, longer preparation, and longer sessions for engagements led by partners with high neutral trait skepticism and high moral courage. We find no significant results for partners with a high presumptive doubt trait. Additional cross-sectional analyses show that the effect of professional skepticism on FBQ depends on situational, organizational conditions.

Keywords: Professional Skepticism, Fraud Brainstorming, Fraud Risk Assessment, Fraud, Brainstorming

JEL Classification: M42; J24

Suggested Citation

Janssen, Sanne and Hardies, Kris and Vanstraelen, Ann and Zehms, Karla M., Professional Skepticism Traits and Fraud Brainstorming Quality (September 25, 2020). Available at SSRN: https://ssrn.com/abstract=3719155 or http://dx.doi.org/10.2139/ssrn.3719155

Sanne Janssen (Contact Author)

Open University ( email )

P.O. Box 2960
Heerlen 6401DL
Netherlands

University of Antwerp ( email )

Prinsstraat 13
Antwerp, B-2000
Belgium

Kris Hardies

University of Antwerp ( email )

Department of Accounting and Finance
Pleinlaan 13
Antwerp, 2000
Belgium

Ann Vanstraelen

Maastricht University ( email )

P.O. Box 616
Maastricht, Limburg 6200MD
Netherlands

Karla M. Zehms

University of Wisconsin - Madison - Department of Accounting and Information Systems ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States
608-234-1052 (Phone)
608-265-5031 (Fax)

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